USD/CAD jumps above 1.3650 and the dollar turns positive after a strong reversal

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  • The dollar gains momentum during the American session amid risk aversion.
  • DXY reverses sharply from 110.70 to 111.50.
  • USD/CAD rebounds more than 120 points from daily lows.

USD/CAD rallied sharply from a two-day low around 1.3530 to 1.3658, hitting a fresh daily high. The rebound was triggered by a broader recovery in the dollar following the release of US economic data.

The dollar was falling, but reversed course sharply after the manufacturing PMI and labor market opening reports. Both reports exceeded expectations. Following the figures, US equities turned sharply lower, and US yields soared.

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The Dow Jones falls 0.51% after a positive opening, while the SP500 falls 0.45%. The US 10-year yield rose from 3.92% to 4.07%, while the 2-year yield rose from 4.40% to 4.53%, hitting the highest since October 21.

The Canadian S&P Global Manufacturing fell from 49.8 to 48.8 below the 49.2 market consensus. Late Tuesday, Bank of Canada Governor Tiff Macklem will deliver a speech.

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Market participants are focused on the FOMC meeting that started on Tuesday. The Federal Reserve is expected to announce a 75 basis point rate hike. “The decision will bring policy to a level where the Committee might feel more comfortable shifting to a more stable rate of rise. The exact timing, however, will largely depend on CPI data ahead of the December meeting. Powell may offer some clues in the post-meeting press release,” analysts at TD Securities said.

levels to watch

To the upside, above 1.3660, next resistance is at 1.3685 (31st Oct high), followed by 1.3755. To the downside, support could be found at 1.3605/00 and then at 1.3580 and the 1.3500 area. A daily close below 1.3500 would open the door to more losses.

USD/CAD

Overview
last price today 1.3631
daily change today 0.0006
Today’s daily variation in % 0.04
Daily opening today 1.3625
Trends
daily SMA20 1.3697
daily SMA50 1.3441
daily SMA100 1.3178
daily SMA200 1.2943
levels
Previous daily high 1.3685
Previous Daily Low 1.36
Previous Weekly High 1.3774
Previous Weekly Low 1.3496
Previous Monthly High 1.3978
Previous Monthly Low 1.3496
Daily Fibonacci of 38.2% 1.3653
Daily Fibonacci of 61.8% 1.3632
Daily Pivot Point S1 1.3588
Daily Pivot Point S2 1.3551
Daily Pivot Point S3 1.3502
Daily Pivot Point R1 1.3674
Daily Pivot Point R2 1.3722
Daily Pivot Point R3 1,376

Source: Fx Street

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